Loans have been frowned upon for decades.
Fortunately, we do not live in those times anymore.
Loans were once considered to be matters of embarrassment and inferiority. Added to this stigma, loans were compared to intricate webs of monetary transactions.
Today, loans seem to go hand in hand with studying abroad. There is so much more to loans than the mere borrowing and lending of money. Yet, the entire process of loan selection and application can be simplified and made hassle-free. Earlier, only public sector banks were able to provide authorised loans. These loans had criteria that were difficult to match- a collateral requirement, cosigner, etc. The application process and processing period of these loans was lengthy and time-consuming. Of late, a number of organizations (such as NBFCs) provide student loans with several options. A loan without collateral or cosigner did not exist a couple of decades ago, but these loans are quite popular today. Overall, loans have become accessible to a larger number of students, since the loan requirements have become flexible.
But is that the only reason to apply for an education loan?
The flexibility of education loans is a major reason. Earlier, the choices of education loans were limited, and the entire procedure seemed comprehensive and expensive. But in recent times, there are numerous loan options to choose from. Many banks and Non-Banking Finance Companies (NBFCs) offer a wide range of loans, each with its own criteria and requirements. There exist loans with or without a US cosigner, and even without collateral. Moreover, certain banks and NBFCs offer to fund the entire cost of education.
Another reason is that you can preserve your assets for the future. Often when a large amount needs to be paid, the safest choice seems to be selling property or valued heirlooms. But this is no longer a necessity. Education loans allow students to fulfill their dreams, without forfeiting an asset.
A lesser-known reason is that loans teach students about independence. Conventionally, one learns how to manage his/her finances after employment, which is only after the completion of his/her education. In contrast, certain concepts of finance seem familiar to a student on an education loan. This is mainly because the student is aware of the different loan options, eligibility criteria, repayment periods, foreign exchange and interest rates. In most cases, the student pays the student loan independently, which reduces the burden on his/her parents, all while increasing the student’s confidence and practical knowledge.